First Time Home Buyers, Part 3 – Should you use your own real estate agent?

I recently shared information for potential first time home buyers about the differences between renting and owning, and about whether a first house is affordable (see links at the end of this blog). 

The question this time is — should a first time home buyer use their own real estate agent?

This question has a simple answer.

yesYes, you should (and I’m not saying that because I’m an agent).

There are several major reasons.

The first reason: The agent listing a home does not work for you, the buyer.

Many new buyers believe that if they are interested in a home, their best course of action is to call the agent who is selling the home.   If they like the home when they see it, and they make an offer with that agent, they may mistakenly believe that agent is representing them.  This is not true.  While the agent listing a house must show fairness and honesty and accuracy to anyone making an offer, that agent represents the seller.  This means, the agent does not care what you want to spend, and in fact, is legally responsible to share any information about what you do or don’t want with her seller.  That agent is also not able to share with you any financial market information which might help you figure out the correct price, because that would be helping you and not the seller.  This agent does not owe you any confidentiality, and therefore, anything you say will be shared with the seller.

deedFor example, let’s say you saw a great $200,000 home that you wanted, but you can only spend $185,000.  If you had a buyer agent who was representing you, the agent would do a market analysis for you and would find out that similar houses in the area are selling for $170-185K.  She would then help you put together an offer around $170 or 175K, and would provide backup for the market reasons why she/he believes that price is appropriate.  She would negotiate with the listing agent, on your behalf, and would help you get the best deal for you. 

But now let’s do the same example with you negotiating with the agent who is selling the house, the listing agent.   You make an appointment to see the house, and you wander through it, and realize this is PERFECT.  So you say, “I love it, and I want to offer $170K, but I would go up to $185K but that’s the most I can spend and I couldn’t go any higher.”   The agent would then go to the seller and say, “Hey, this buyer offered $170K, but they would go to $185K” because that agent is required to share all the information with their actual client, the seller.  Obviously you are not going to buy the house for $170K because they already know you will go up to $185K.  If the seller would have accepted $170K or $175K had the offer come from a buyer’s agent, now they will just tell you it’s $185K firm.

Do you see the difference?

The second reason: The agent selling a home does not work for you.   Yes, I know, it’s the same reason as number one, but that’s because it’s so important to understand! 

The third reason:   There is no difference in commission paid if only one agent is used

moneySometimes, a buyer will think they can get the house for less money if they don’t use a separate agent, because then there won’t be the additional commission to the second agent.  That’s not how the commission works.  Basically, the seller and the listing agent decide on the commission up front.  Let’s say it’s 5% of the purchase price.  They also decide how much of that will go the buyer’s agent.  Let’s say it’s 2%.  If there IS no buyer agent, the listing agent usually gets to keep the entire 5%.  So there is no reduction in commission if only one agent is used.

The fourth reason:  You don’t have to pay out of your pocket for the buyer agent

The commission for the buyer’s agent comes out of the seller’s proceeds at the closing.  The buyer does not have to directly pay a buyer’s agent for their work.   So it makes sense to use a buyer’s agent, since it doesn’t cost anything!

The final reason:  There is a LOT involved in purchasing a home.

Finding the right house for you at the right price is only a small part of what the buyer’s agent does for you.  See for more. 

Next time, I’ll provide information about the entire home buying process.


Also see:

First Time Home Buyers, Part 1 – Come Out, Come Out, Wherever You Are

First Time Home Buyers, Part 2 – Can You Afford to Buy?


2 thoughts on “First Time Home Buyers, Part 3 – Should you use your own real estate agent?

  1. Nice post. I used to be checking continuously this blog and I am inspired! Extremely helpful info particularly the closing phase 🙂 I deal with such information much. I used to be looking for this certain information for a very lengthy time. Thanks and good luck.

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